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Pakistan to get $1.65bn net receipts out of $6bn IMF package

maithil

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Pakistan will get net receipts of about $1.65 billion in four years from the International Monetary Fund (IMF) under the just concluded $6bn bailout as it delivers on a steep macroeconomic adjustment plan.

A senior government official told Dawn that beginning this year Pakistan will receive a total of $6bn in about three years ending 2021-22 from the IMF, while it has to repay about $4.355bn in four years ending 2022-23, showing net receipts of $1.65bn.

He said the government is expected to receive first disbursement of about $1bn this week under the $6bn Extended Fund Facility (EFF) that would boost the foreign exchange reserves in the short term, but its repayment obligations under the previous $6.4bn EFF have already begun.

Islamabad has to repay about $4.35bn in four years

The Fund’s previous EFF had envisaged a repayment period ranging between four-and-a-half years and 10 years, with repayments in 12 equal semi-annual installments. The 12 disbursements by the IMF had started during the fiscal year 2013-14 and completed in September 2016. The repayments under that programme started in March 2019 with $532 million, including $70m interest charges, and will continue until June 2026.

Therefore, in the near term net inflows during the 39-month period of the programme from the IMF are estimated at $2.72bn. Pakistan will receive $2.3bn during the current fiscal year, followed by $1.847bn next year (2020-21) and $1.847bn in 2021-22. During the current fiscal year, Pakistan has to make repayments of $1.045bn, followed by $1.167bn in 2020-21 and $1.06bn in 2021-22. This means the net inflows will amount to $1.26bn during the current fiscal year, followed by $680m next year and $786m in 2021-22.

In contrast, there will be no inflows from the IMF during the fiscal year 2022-23, but $1.08bn repayments to the Fund will be due that year. After accounting for $532m repayments last fiscal year and due until 2022-23, Pakistan’s inflows from the Fund will be $6bn against the outflows of $4.9bn, meaning net inflows of just $1.1bn over the five-year period.

However, the programme is expected, in the words of the IMF, “to coalesce broader support from multilateral and bilateral creditors in excess of $38 billion, which is crucial for Pakistan to meet its large financing needs in the coming years”.

This will include about $8.7bn project loans, $4.2bn programme loans (mostly from the World Bank and the Asian Development Bank), about $14bn of rollover loans (from Saudi Arabia, the UAE, China, Qatar and Islamic Development Bank) and up to $8bn in commercial loans. This will also include borrowing from the international capital market at least $1bn per annum.

As part of the IMF package, Pakistan has committed a comprehensive reform programme to stabilise the economy and lay the foundation for a robust and balanced growth. That would mean the economic growth rate going down to 2.4 per cent during the current fiscal year, compared to 3.3pc of GDP last year ending June 30, 2019.

Likewise, the rate of inflation has been projected at 13pc under the IMF programme. The authorities have promised the keep the State Bank of Pakistan’s policy rate at least 1.5pc higher than the projected inflation. This means the policy rate will further go up to 14.5pc from 12.25pc at present.

Also, the fiscal deficit will stay stagnant at about 7.1-7.3pc, while general government debt will further go up to almost 77pc of GDP during the current year, up from about 75pc of GDP last year. The current account deficit is estimated to reduce from 4.6pc of GDP to 2.6pc during the current year.

The government has promised in writing a decisive fiscal consolidation to reduce public debt and build resilience, starting with the adoption of an ambitious FY2020 budget. The adjustment will be supported by comprehensive efforts to drastically increase revenue mobilisation by 4-5pc of GDP at the federal and provincial levels during the 39-month period.

The government has also agreed to ensure a flexible, market-determined exchange rate to restore competitiveness, rebuild official reserves and provide a buffer against external shocks. This will be supported by an appropriate monetary policy to shore up confidence and contain inflation, conducted by an independent central bank.

The authorities will also ensure energy sector reforms to eliminate quasi-fiscal losses and encourage investment, including by depoliticising gas and power tariff setting and within three years gradually bringing the sector to full cost recovery.

The structural reforms will be ensured through strengthening institutions, increasing governance and transparency and promoting an investment-friendly environment to improve productivity, entrench lasting reforms and ensure sustainable growth.

https://www.dawn.com/news/1492745
 
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Lets hope PTI can deliver on the reforms it has agreed otherwise it will leave country in deeper mess.
 
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Lets hope PTI can deliver on the reforms it has agreed otherwise it will leave country in deeper mess.

How you can deliver in a Country where Industry Pays 70% tax and Service sector Pays very very less. Every one is on strike against taxes. Rich dont want to pay taxes, poor dont want to pay taxes, middle class dont want to pay taxes. Every one wants Money and sarkari nokri. It is the mindset of this Society that is the Problem.
 
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taxes are not only problem of our economy,we lack economic policies and infrastructure for economic growth ,no economy can run solely on taxes ,there are many other factors which govt is ignoring.
How you can deliver in a Country where Industry Pays 70% tax and Service sector Pays very very less. Every one is on strike against taxes. Rich dont want to pay taxes, poor dont want to pay taxes, middle class dont want to pay taxes. Every one wants Money and sarkari nokri. It is the mindset of this Society that is the Problem.
 
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taxes are not only problem of our economy,we lack economic policies and infrastructure for economic growth ,no economy can run solely on taxes ,there are many other factors which govt is ignoring.

taxes are one of the main Problem, every gov has not implemented Right tax Regime because of political gains and buisnesses in Pak are now used to not even hear About word "Tax". Just take loans and give to every one that is the Regime I have seen since I was Born. Number 1 army bhi chahiye sasti gas bijli bhi chahiye bary bary dams bhi chahiye mehngai me kami bhi chahiye motorways aur Metros bhi chahiye achi education aur Health facilities bhi chahiye par Tax nahi dena. Why only our Industry is contributing in 70% tax why Services sector is reluctant to pay any tax even if GDP share of Services sector is around 50%
 
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How you can deliver in a Country where Industry Pays 70% tax and Service sector Pays very very less. Every one is on strike against taxes. Rich dont want to pay taxes, poor dont want to pay taxes, middle class dont want to pay taxes. Every one wants Money and sarkari nokri. It is the mindset of this Society that is the Problem.

Put danda in behinds of those who don't pay due taxes instead of increases taxes on those who are already paying. Reform tax laws to make it simple and straightforward where common man don't need assistance of tax lawyers/consultants and get ripped offed by them or FBR offcials, Make people file their tax returns and punish those who don't do so, make filing of tax returns easier and facilitate uneducated / computer illiterate people in return filing. Fix the FBR to stop revenue losses and harassment. These are basic reform on taxation front which PTI government must deliver, there's no other way. People will scream, whine when reforms will take place and they have to change their habit of not being answerable (tell state about their income) and pay due taxes but will at the end have to reconcile with new norms (Proverb "Laaton k bhoot baatoon se nahi mantay" wasn't coined in this region without any reason). It's time for IK to follow what he preach "Ghabrana Nahi Hai", and should go ahead with tough reforms ignoring the screams to fix the system.
 
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taxes are not only problem of our economy,we lack economic policies and infrastructure for economic growth ,no economy can run solely on taxes ,there are many other factors which govt is ignoring.
People will pay taxes happily when they are earning. GOVT seem only interested in taxes but what exactly are they doing to encourage economic activity. Some people will say that in order to produce projects GOVT needs money etc but then we are in a chicken and egg like situation. I think that taxation reforms are more appropriate and meaningful when you have suitable economic conditions otherwise it simply makes people more unhappy.

Put danda in behinds of those who don't pay due taxes instead of increases taxes on those who are already paying. Reform tax laws to make it simple and straightforward where common man don't need assistance of tax lawyers/consultants and get ripped offed by them or FBR offcials, Make people file their tax returns and punish those who don't do so, make filing of tax returns easier and facilitate uneducated / computer illiterate people in return filing. Fix the FBR to stop revenue losses and harassment. These are basic reform on taxation front which PTI government must deliver, there's no other way. People will scream, whine when reforms will take place and they have to change their habit of not being answerable (tell state about their income) and pay due taxes but will at the end have to reconcile with new norms (Proverb "Laaton k bhoot baatoon se nahi mantay" wasn't coined in this region without any reason). It's time for IK to follow what he preach "Ghabrana Nahi Hai", and should go ahead with tough reforms ignoring the screams to fix the system.
Exactly, don't put more taxes on people who are paying to increase collection, instead focus on increasing the tax payers and make that damn taxation process simple and straight.
 
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our economy lacks innovation and productivity which has resulted in increase of imports and decline in exports,we are paying already huge amount of sales tax.In all other nation sales taxes are replaced by value added tax which is only percentage of profit on value added to product but here we pay sales tax on whole price which is cost plus profit and is much higher.Many other countries have more defense budget than ours and we consume much less electricity and gas as compared to other nations.Our govt is spending least on human development,health,education and infrastructure ,wages of people are low and you cannot charge much tax from low wages and large portion of public has become jobless so they will be unable to pay tax.Taxes not work in isolation and when your economy is not making money you cannot increase taxes.High taxes are not applicable in third world,it only works in developed countries
taxes are one of the main Problem, every gov has not implemented Right tax Regime because of political gains and buisnesses in Pak are now used to not even hear About word "Tax". Just take loans and give to every one that is the Regime I have seen since I was Born. Number 1 army bhi chahiye sasti gas bijli bhi chahiye bary bary dams bhi chahiye mehngai me kami bhi chahiye motorways aur Metros bhi chahiye achi education aur Health facilities bhi chahiye par Tax nahi dena. Why only our Industry is contributing in 70% tax why Services sector is reluctant to pay any tax even if GDP share of Services sector is around 50%
 
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People will pay taxes happily when they are earning. GOVT seem only interested in taxes but what exactly are they doing to encourage economic activity.
Oh please save us the political rhetoric. Just look at all the cars in rush hour traffic. At this point if people aren't paying taxes (according to their income bracket) they deserve to be shafted.
 
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our economy lacks innovation and productivity which has resulted in increase of imports and decline in exports,we are paying already huge amount of sales tax.In all other nation sales taxes are replaced by value added tax which is only percentage of profit on value added to product but here we pay sales tax on whole price which is cost plus profit and is much higher.Many other countries have more defense budget than ours and we consume much less electricity and gas as compared to other nations.Our govt is spending least on human development,health,education and infrastructure ,wages of people are low and you cannot charge much tax from low wages and large portion of public has become jobless so they will be unable to pay tax.Taxes not work in isolation and when your economy is not making money you cannot increase taxes.High taxes are not applicable in third world,it only works in developed countries

I dont know which universe you are Talking About, In developed countries we can't even think of Opening a small shop and not paying taxes every Thing has a digital reciept but in Pak I don't know which small or medium buisnesses are paying taxes. Still remember strike of Traders in Musharaf era. Yesterday was Hearing a press conference of Chairman FBR where industrialists said Distributors don't want to pay taxes on face of Chariman FBR. Come here in Germany and try running a small or medium buisness without taxes. My Father is a small buisnessman, mine Uncle is running a medium size factory and i know alot of shope owners, Distributors, Traders they all are running buisnesses without paying taxes. And you can't run a Country like that it is as simple as that.

Exactly, don't put more taxes on people who are paying to increase collection, instead focus on increasing the tax payers and make that damn taxation process simple and straight.

Now they have tried it and we are having strikes countrywide. Traders are on of the biggest mafia of this Country.
 
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developed countries can implement it easily due to better law and order situation and good infrastructure and literacy rate.Here most of people involved in trading are not educated properly so it will take time.Even if these traders pay taxes to govt they will pass this burden on common public in the form of price hike and our common public is not as rich as in western developed nations to bear this burden that is why I said third world nation cannot copy western developed nations tax model immediately.We have to move in steps to reach this level by also improving slowly other economic factors in addition to tax
I dont know which universe you are Talking About, In developed countries we can't even think of Opening a small shop and not paying taxes every Thing has a digital reciept but in Pak I don't know which small or medium buisnesses are paying taxes. Still remember strike of Traders in Musharaf era. Yesterday was Hearing a press conference of Chairman FBR where industrialists said Distributors don't want to pay taxes on face of Chariman FBR. Come here in Germany and try running a small or medium buisness without taxes. My Father is a small buisnessman, mine Uncle is running a medium size factory and i know alot of shope owners, Distributors, Traders they all are running buisnesses without paying taxes. And you can't run a Country like that it is as simple as that.



Now they have tried it and we are having strikes countrywide. Traders are on of the biggest mafia of this Country.
 
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developed countries can implement it easily due to better law and order situation and good infrastructure and literacy rate.Here most of people involved in trading are not educated properly so it will take time.Even if these traders pay taxes to govt they will pass this burden on common public in the form of price hike and our common public is not as rich as in western developed nations to bear this burden that is why I said third world nation cannot copy western developed nations tax model immediately.We have to move in steps to reach this level by also improving slowly other economic factors in addition to tax

These excuses are not valid anymore you dont have time to implement all this "Slowly". Peopl have to pay, Pakistani People have to own the Country now no one will give loans after 5 or 10 years if this countinues. you have to pay 3000 Billion for loan repayment + 1200-1500 billions for Defence + some 1800 Billion to provinces + you have 700-900 psdp + you have 1800 Billion circular debt + 1000 Billion for State owned Enterprises + hundered of billions of other expenses. How you will run a Country with such huge Budget Needs with this Kind of mindset. Only taxes and Exports can save this Country if People will not own it, it will not be a surprise that Pak will go bankrupt.
 
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ok increase taxes but remember taxes increase before exports increase will never lead to rise in exports and tax collection will always miss target.People will simply decrease buying products when price become high,traders will lose income as a result and will become burden on economy as he will be unable to spend on his family education and health as well and govt will lose tax collection through sales tax due to decline in sales as people have not much money left to buy goods with high costs.This is not excuse but is simple economic concept
These excuses are not valid anymore you dont have time to implement all this "Slowly". Peopl have to pay, Pakistani People have to own the Country now no one will give loans after 5 or 10 years if this countinues. you have to pay 3000 Billion for loan repayment + 1200-1500 billions for Defence + some 1800 Billion to provinces + you have 700-900 psdp + you have 1800 Billion circular debt + 1000 Billion for State owned Enterprises + hundered of billions of other expenses. How you will run a Country with such huge Budget Needs with this Kind of mindset. Only taxes and Exports can save this Country if People will not own it, it will not be a surprise that Pak will go bankrupt.
 
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ok increase taxes but remember taxes increase before exports increase will never lead to rise in exports and tax collection will always miss target.People will simply decrease buying products when price become high,traders will lose income as a result and will become burden on economy as he will be unable to spend on his family education and health as well and govt will lose tax collection through sales tax due to decline in sales as people have not much money left to buy goods with high costs.This is not excuse but is simple economic concept

taxes should not be increased, at the Moment Industry is paying 70% taxes while contributing i think around 30% in the economy and Services sector is paying some 2% taxes while economic share in gdp is around 50%. Taxes should be less on Industry and tax base should be broden every one should participate in Building this Country not only Industry and salaried class. These Traders, Distributors, smes etc should pay taxes so gov can ease tax on huge industries and bring in more Investment which will create Wealth and Jobs in return. That is the solution which works every where. and if you want People to not pay taxes because Profit or income will decrease well thn good luck with that.
 
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taxes on traders or distributors should be imposed but govt should start from low percentages until earning of common public consumer is increased as this will lead to inflation.One way to deal with this is to promoted b2b business in which retail shops buy directly from factories,producers or importers so traders are not involved in such supply of goods
taxes should not be increased, at the Moment Industry is paying 70% taxes while contributing i think around 30% in the economy and Services sector is paying some 2% taxes while economic share in gdp is around 50%. Taxes should be less on Industry and tax base should be broden every one should participate in Building this Country not only Industry and salaried class. These Traders, Distributors, smes etc should pay taxes so gov can ease tax on huge industries and bring in more Investment which will create Wealth and Jobs in return. That is the solution which works every where. and if you want People to not pay taxes because Profit or income will decrease well thn good luck with that.
 
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